If the price elasticity of demand for automobiles is 2:
A. a 10 percent increase in price would result in a 10 percent decrease in quantity demanded.
B. a 10 percent increase in price would result in a 20 percent increase in quantity demanded.
C. a 10 percent decrease in price would result in a 20 percent decrease in quantity demanded.
D. a 10 percent decrease in price would result in a 20 percent increase in quantity demanded.
Answer: D
You might also like to view...
When tastes are quasilinear, the sole reason for the deadweight loss from a per-unit tax is that output falls under the tax.
Answer the following statement true (T) or false (F)
Which of the following is true about rational expectations?
a. People form expectations on the basis of information about past as well as future actions of policy makers. b. Wage agreements do not reflect inflationary expectations if workers expect continued inflation c. Rational people cannot easily anticipate the effects of discretionary policy on the price level and output. d. The role of expectations is applicable in the context of monetary policy only. e. The effectiveness of a particular government policy is independent of people's expectations.
A depreciation of the U.S. dollar against foreign currencies tends to __________ U.S. net exports and shift the U.S. AD curve to the __________
A) raise; right B) raise; left C) lower; right D) lower; left
One disadvantage of using the government to provide pure public goods is that everyone receives ________ of the public good and has ________ for the public good.
A. the same amount; a different reservation price B. a different amount; the same reservation price C. the same amount; the same reservation price D. a different amount; a different reservation price